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New York Cannabis Licensing, Part 2: The Application Process – Canna Law Blog™

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Finally, the post that all prospective New York cannabis applicants have been waiting for: an explanation of the Marijuana Regulation and Taxation Act’s (MRTA) license application process.

We ask you to curb your enthusiasm: while the MRTA provides a framework for the license application process, the actual license application (including the license fee) will be created by the Cannabis Control Board (CCB). When? Hopefully in the next few months. The MRTA requires the CCB to deliver its first annual report by January 1, 2023, which means that the MRTA contemplates cannabis sales in 2022.

Instead of walking through the relevant provisions section by section, we thought it would be helpful to answer the questions every prospective applicant has already asked. Here they are:

Where can I obtain a license application?

From the Office of Cannabis Management (OCM). Eventually. As we have repeatedly stressed, the CCB will be creating the rules and regulations for adult use licenses, including the form of the license application. The OCM will be responsible for administering the application process.

What information will be required for a license application?

The MRTA requires the following information to be included as part of the application created by the CCB (as well as anything else the CCB comes up with):

  • Information about the applicant’s identity, including racial and ethnic diversity. Although not expressly discussed, we assume this includes information about anyone who has an ownership interest in the applicant if the applicant is an entity (which we strongly recommend for just about any licensee).
  • Ownership and investment information for entity applicants, including a detailed explanation of the applicant’s corporate structure.
  • Evidence of good moral character, which we presume is clearing the criminal background check as required in the MRTA’s general provisions article.
  • Fingerprints for the applicant (principals, officers, directors, etc. if an entity).
  • Information about the premises that will be licensed.
  • Financial statements for the applicant.

Is there a license fee?

The license application will require a check for the license fee, so it is safe to say that a license fee will be required. But we don’t know what the license fee will be across the different license types.

The license fee will be set by the CCB. Interestingly, the MRTA provides that the license fee may be based on cultivation and/or production volume, implicitly contemplating a sliding scale for license fees.

Another fun inclusion: the CCB also has the right to charge a biennial license fee (after the initial license is issued), which would be based on the amount of cannabis cultivated, processed, distributed and/or dispensed by the licensee (as applicable) or gross annual receipts of the licensee for the previous license period.

What are the selection criteria?

At a minimum, plus anything else the CCB adds as part of issuing the industry rules and regulations:

  • Whether the applicant is a social and economic equity applicant.
  • The applicant’s ability to demonstrate effective controls against the illegal diversion of cannabis.
  • The applicant’s ability to comply with applicable state laws and regulations.
  • The applicant’s and its officers’ ability to properly carry on the activities for which a license is sought, including with assistance from the social and economic equity and incubator program, if applicable.
  • Whether the applicant possesses or has leased sufficient land, buildings, and equipment to carry on the activities described in the application or has a plan to do so if qualifying as a social and economic equity applicant.
  • If a non-social and economic equity applicant, whether such applicant sets out a plan for benefiting communities and people disproportionately impacted by the enforcement of cannabis laws.
  • Whether it is in the public interest that the applicant be granted a license.
  • Whether the applicant and its managing officers are of good moral character and do not have ownership or controlling interests in more licenses or permits than allowed by the MRTA.
  • Whether the applicant has entered into a collective bargaining agreement.
  • The applicant’s plan for contributing to communities and people disproportionately harmed by enforcement of cannabis laws.
  • For adult-use cultivator or processor applicants, the environmental and energy impact of the facility to be licensed.

Who evaluates license applications?

The OCM performs the initial evaluation of every application and submits its recommendation to the CCB. If the CCB is not satisfied with an application, the CCB’s executive director is required to notify the applicant of the specific reasons for the denial. An administrative appeal process has not been released, but the MRTA’s general provisions contemplate that a denied applicant can appeal through an Article 78 proceeding.

How long is the license term?

All initial licenses will be for 2 years.

Can a license be renewed?

It can, upon submitting a renewal application to the OCM and paying a renewal fee.  Renewal applications will be issued at least 90 days prior to the expiration of the existing license.

Beyond requiring information that we expect will be consistent with the initial license application, renewal applicants will also have to:

  • Submit documentation of the racial, ethnic and gender diversity of the licensee’s owners and employees prior to a license being renewed.
  • Provide evidence that the licensee has executed their plan for benefiting communities and people disproportionately impacted by cannabis law enforcement as detailed in the licensee’s initial application.
  • Maintain a labor peace agreement with a bona-fide labor organization (maintaining such an agreement is a material condition of licensure).

Can a license be transferred?

Yes, but not without the CCB’s approval.  Transfers and any changes in the underlying license information, such as changes in ownership, substantial changes to the licensee’s corporate structure, and changing the licensed locations, require CCB approval. Changes without CCB approval constitute grounds for suspension, revocation or cancellation of a license.

The broad takeaway from the MRTA’s adult-use licensing provisions is that applicants will need to have a lot of bases covered prior to submitting an application. As we all eagerly await the CCB’s issuance of its rules and regulations, we here at the Canna Law Blog will continue our series on the MRTA and provide regular updates on developments in New York’s cannabis industry. Stay tuned!